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Tax Legislation Affecting Manufacturers

It has been a busy legislative session from a tax perspective. Below are a few of the signed laws that affect the Manufacturing and Distribution Industry. In addition, we will have a full summary of the applicable tax legislation in our Summer Newsletter, which will be available in early August.

SB 6057: This bill contains several tax preference extensions and new incentives, some of which affect manufacturers and distributors:

Tax credits of up to $1500 per employee are available for employers hiring qualified veterans after October 2016. Veterans must have been unemployed for at least 30 days prior to hiring and must be permanent full time employees for at least two consecutive full quarters to qualify.

Creates a pilot program for a sales/use tax deferral for new manufacturing facilities. Deferred taxes will be used to provide job training and professional development in the manufacturing industry. An application must be submitted in advance of construction or acquisition of qualifying equipment purchases.

Sales and use tax exemptions for wax and ceramic materials used to make molds are made permanent.

SB 6138: The law clarifies that a manufacturer, as defined for the Manufacturing Machinery and Equipment exemption, does include producers of prewritten software transferred electronically. In addition, certain large software companies may not be able to claim the exemption for their equipment.

SB 5761: This law allows a partial property tax exemption for 10 years for new qualifying facilities. To qualify, the new manufacturing or industrial facility must be 10,000 square feet or larger, have an improvement value of $800,000 or greater, and create at least 25 family wage jobs. Currently, the cities of Arlington, Marysville, and Lake Stevens qualify for participation. Contact the cities directly for eligible areas and application requirements.

We anticipate the Department of Revenue to issue additional guidance on how these new tax incentives will be administered in the coming months, including any program applications. If you have questions on a particular tax change, please contact Rachel Roberson at (425) 454-7990.